Singer Lee Seung-gi's W10.5b jeonse set to expire as landlord Cha Ga-won is detained

Cha Ga-won, chairman of entertainment agency One Hundred Label [Yonhap]

With the jeonse contract on singer Lee Seung-gi's luxury villa in Seoul — worth 10.5 billion won ($7.34 million) — set to expire this month, attention is turning to whether Lee will be able to recover his deposit now that the property's owner, One Hundred Label chairman Cha Ga-won, has been detained.

A court issued an arrest warrant against Cha on Monday on charges of aggravated fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, and he was subsequently taken into custody.

Cha is accused of proposing an intellectual property-based business venture to Nomuss Co. — using the IP of artists signed to his entertainment agency — and collecting 24.2 billion won in advance payments after signing a contract, without actually carrying out the project. Investigators reportedly found evidence suggesting he launched the entertainment agency while already carrying substantial debt, and later used a contract-splitting scheme to roll over his obligations. Cha's legal team has denied all the charges.

Cha's detention has also drawn scrutiny to the outcome of his financial disputes with artists and staff at his agency. Beyond the fraud allegations involving Nomuss, Cha faces separate claims that he failed to pay settlement fees owed to singers Lee Seung-gi, Lee Mu-jin, EXO-CBX and The Boyz, and that he withheld wages from employees and payments from partner companies.

Singer Lee Seung-gi and One Hundred Label chairman Cha Ga-won [Yonhap]

Lee Seung-gi's situation is drawing particular attention. He entered a jeonse arrangement at a luxury villa in Yongsan-gu, Seoul, owned by Cha, paying a deposit of 10.5 billion won, and that contract expires this month. Lee has previously raised concerns about not getting his deposit back, alleging that Cha had him sign the lease at above-market rates as part of a jeonse fraud scheme. About 7.3 billion won of the 10.5 billion won deposit was financed through loans rather than Lee's own funds, meaning he would have to repay those loans out of pocket if the deposit is not returned. Legal remedies exist — including a lawsuit to reclaim the deposit, compulsory enforcement and auction proceedings — but such processes take considerable time, and whether a full recovery is even possible remains uncertain. Earlier this year, it emerged that the villa where Lee currently lives had been seized by the National Tax Service over Cha's unpaid taxes.

Lee had also invested heavily in constructing a building in Jangchung-dong, Seoul, but is reportedly unable to move in because the contractor has exercised a lien over unpaid construction costs. Lee had been expected to move into that building once his current jeonse contract ended, but that option has now effectively closed off. The contractor is Piarc Construction, a family company affiliated with Cha.

paq@heraldcorp.com